HOW TO START A LOGISTIC AND HAULAGE BUSINESS IN NIGERIA

INTRODUCTION

Haulage/logistics refers to the transportation of goods/products from one location to another within a nation or across many nations. The haulage and logistic service is rendered using vehicles that are big and strong enough to lift large amount of items at once. These vehicles include: trucks, trains, tankers, trailers, cranes, and so on.  A logistics company deals with everything from warehousing clients’ products to shipping them to remote locations.

Many modern businesses rely on logistics companies to help them manage their shipping and warehousing needs. Companies that specialize in this service handle a variety of different tasks for other businesses ranging from storing products to delivering them to their final destination. They often work with companies that are shipping goods overseas or that are shipping large items that require freight services.

The rise in e-commerce brought about by changes in technology has created opportunities for growth and expansion in sectors related to e-commerce such as logistics sector. Companies like Konga, Jiji, Jumia, Pointek are some of the online stores with strong online presence. E-commerce relies heavily on logistics to be successful as the goods ordered by customers online would have to be delivered to them at their various locations.

Logistics business has over time, being called many names such as door-step delivery service, bike delivery service, transportation service, dispatch rider business, among others. Logistics business involves the procurement, distribution, inventory, maintenance, replacement of personnel materials and information to achieve organizational goals. It involves getting products and services from a supplier or manufacturer to a consumer. Logistics may also apply to warehousing, transportation, inventory, packaging, material handling, disposal and security within the business sector. Logistics companies help many modern businesses to manage their shipping and warehousing needs. They handle a variety of different tasks for other businesses ranging from storing products to delivering them to their final destination. They often work with companies that are shipping goods overseas or that are shipping large items that require freight services.

Haulage business industry is large and basically involves the transportation of bulk goods or the leasing of trucks to haulage companies. One needs to decide on the mode of operation his business will have and what its focus would be.

 

THE ECONOMIC IMPORTANCE OF HAULAGE/LOGISTICS BUSINESS

Haulage involve transporting goods from one place to another. The transportation sector is key to the development of any nation. An improvement in the haulage/logistics businesses in Nigeria will lead to a growth or improvement in Nigeria’s transportation sector and ultimately to economic growth of Nigeria.

 

WHY SHOULD ONE VENTURE INTO LOGISTIC/HAULAGE BUSINESS?

Venturing into a logistics business is a good idea because there are huge profits in logistics business. However, you need to be well grounded in all aspects of the business and must deliver top notch service if you plan to survive in the industry. A company that fails to plan, study its business environment to quickly adapt to the changes that occur, offer value and understand its competitors will not survive in the long run no matter how profitable the industry is. Hence it is important to be at alert and ready to grab the opportunities that arise, minimize threats, improve on your strengths and reduce the weaknesses of your business so you can fully maximize the profit potential of the industry.

The haulage/logistics industry is one with a high potential for growth and continuous existence as the need for haulage/logistics services will always exist so long as man exists and goods need to be transported from place to place.

HOW TO START A LOGISTICS/HAULAGE BUSINESS IN NIGERIA

A lot of things have to be considered and put in place before one can venture into any type of business. Logistic/haulage business just like any other business requires some things to be put in place and planned for in order to succeed. The following are the necessary steps to take to start up a logistic/haulage business.

• Source for Funds/Investment Capital

You need to source for funds that you will use to start up your logistic company. The haulage business requires huge capital and one may not be able to raise the money alone, you may need to look for investors. The amount of money that you need to obtain depends on the services that you plan on providing. For instance, if you are only going to act as a broker or provide basic freight management services, the capital you will need will not be as much as if you are going to become a full 3PL service. A detailed business plan would need to be prepared which clearly identifies the services that you plan on offering. This plan would assist you in your search for investors because they will need to understand what service your business offers, potential for profitability and growth before they can invest their money into it.

• Obtain all necessary Licences

Your company needs to be properly licensed and registered in order to operate legally. The requirements for licensing differs from state to state. However, there are some basic similarities and requirements. You will need to get a business license, register your business with the Corporate Affairs Commission (CAC) and also fill tax forms with your state. You may want to employ the services of a lawyer to assist you in the registration of your business and obtaining your business licenses.

• Register for Taxes

You need to file for a tax identification number with the tax office. Also, you may need to get registered to pay sales tax or use tax in your state.

• Know your Competitors

It is important for you to research on and know your competitors. Keeping tabs on your competitors will make you to always be alert to their moves and even predict their next moves. This will help you to keep to your toes and always at your best. It can also bring about creativity and innovation. Any business that refuses to know its competitors and keep operating in isolation will end up folding up soonest because the competition is alert to his environment and is swift to effect changes.

• Create a Business Plan

A business plan is a comprehensive document which states the goals and objectives of a business and how these goals and objectives would be achieved. A business plan serves as a guide to how you intend to accomplish your goals.

Drafting a business plan shows that you have a clearly defined goal and have plans on how to achieve these goals. It causes others to see what your long-term goals her and buy into it through the strategies you mapped out to achieve those goals. A business with a business plan can easily access funding from external parties, like government grants, loans etc. Many logistics company require huge capital especially if you want to operate on a large scale. You may be able to finance your business all by yourself at the initial stage but as time goes on there will be need for growth and expansion and that’s where you will need to seek outside investors. A business plan will enable you assess to various sources of finance.

A typical business plan would contain the following:

1. An overview of your Haulage business – The overview of your business plan can in the form of a tagline but would be more effective as a sentence describing what the company is actually into. The overview is known as the value proposition.
2. Executive Summary – The executive summary of a business plan introduces a company, gives background information of the company and explains the reason for existence of the company.
3. General description of the company – Here, you give a general description of the company and its industry.
4. SWOT analysis – SWOT analysis is a tool used to analyze the strengths, weaknesses, opportunities and threats of the company. Strengths and weaknesses are based on the resources the company has or does not have compared to its competitors. What can the competitors do better than the company? Opportunities and threats are related to the business environment the company operates. Opportunities are to be grabbed while threats are to be minimized.
5. Market Research – Here, you research the specific market the company is in or seeks to penetrate. In market research, you get information as to consumers’ preferences and expectations. You also gather information about your competitors : their strength, weakness,
6. Your Strategy – Strategy refers to how you plan to achieve your set objectives. The steps you plan to take towards achieving your goals.
7. The Team – Here, you give information about your team members.
8. A marketing plan – A marketing plan is an operational documents that outlines the advertising strategy your company plans to adopt in order to reach its target market.
9. An operational plan – An operational plan is very detailed and contains information about how each unit plans to contribute to the achievement of the entire company goals and objectives. Here, you outline the daily tasks/target that will be required by each unit in order to achieve the set goals.
10. Financial projection – To project means to estimate. Here, you make some forecasts/estimations about your business operations in the future (usually for five years). The essence of the financial projection is to see the expected profit and performance from the haulage business. You will need to prepare pro income statement, pro statement of cash flows, pro statement of financial position, pro loan repayment.
11. An appendix – All other relevant items that have not been discussed will come under the appendix

• Get a Location for your Haulage Business

The haulage business is both online and offline business. Most transactions would be done online but some customers would prefer to come over to your office so you need to get an office space and keep the office well branded with your business name and your logo. Also the office space should be spacious enough to accommodate your cargo bikes and/or delivery vans.

• Set up a website

To make your business more visible to customers, you need to create a website. Your website stands as an intermediary between you and your customers as that is the platform on which you both would mostly interact. On your website, you advertise your business, your customers sees it and contacts you for an order. Your website should be easy to access by customers and should be updated regularly.

• Hire Staff

You will need to hire some drivers for your trucks, trains, tankers, trailers, cranes or vans. The drivers should be carefully selected and trained with the company’s ideals and culture as they are the face of the brand. They should be polite when making delivery to customers and should be calm when driving.

Other employees too need to be employed to attend to customers when they call, and also man the business website.

• Market your Haulage Business

For every business to survive, it is important Marketing is an important part of business survival. A business that does not engage in marketing cannot operate into the foreseeable future. Marketing involve carrying out activities that makes your business more visible to your target audience. You can market your business through word of mouth, referral, social media advertising, Google advert etc.

• Insure your Haulage Business

You will need to insure your logistics/haulage business. The haulage business involves movement of things from place to place and anything could go wrong along the way. It is therefore important to get an insurance policy to cover for such eventualities that may spring up along the way. A haulage insurance or courier insurance can be taken which covers for damage and injury to third persons, damage to own vehicles, loss or damage of goods.

 

CONCLUSION

The logistic/haulage business is a very profitable business with great potentials for growth. It’s advisable for one to venture into it if one has the interest and is well equipped with the necessary information peculiar to the haulage business and is well prepared to launch into and function well in the industry.

By Taiwo Olowu, ACA

To learn more how we can help you achieve your vision on starting a business like this, please reach us now on 08023200801, email enquiry@mocaccountants.com or send us a detailed request by completing our enquiry form